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How To File A 2012 Tax Return

1040ez Forms And InstructionsH&r Block Key Code For Free State FilingTurbotax Amended Return 2013File Taxes For 2010Amend My 2011 TaxesAmended Return FormTax Form 1040ez 20142009 Amended Tax Return Instructions2011 Taxes Efile2009 Tax SoftwareIndiana State Tax Forms 2011Ri 1040nrPast Year Tax FormsIrs Free FileFile Past Years Tax ReturnHow Do I File A Tax Extension OnlineIrs Ez Form Online2011 1040 EzTax Forms 2009Irs Amended Tax Return Form2009 Taxes LateFiling Past Taxes10 40 EzTurbotax Military Discount 20122011 1040ez FormHow Do You File State Income Taxes1040a Tax FormHow To File A 1040 Ez1040ez Form 2014Federal Tax Booklet1040nr Ez Download2014 Tax Forms 1040ezTax Forms EzIrs Ez Form 20112012 Tax Forms IrsTax 2012Can You Amend A Tax Return2012 Federal Tax Forms 1040ezMilitary Filing State TaxesIrs Forms 1040x Download

How To File A 2012 Tax Return

How to file a 2012 tax return Index A Advance EIC tables, instructions, Advance Payment Methods for the Earned Income Credit (EIC) Aliens, nonresident, Withholding Income Taxes on the Wages of Nonresident Alien Employees Alternative methods of withholding, Alternative Methods for Figuring Withholding C Combined income tax, employee social security tax, and employee Medicare tax withholding tables, Combined Income Tax, Employee Social Security Tax, and Employee Medicare Tax Withholding Tables F Formula tables for percentage method withholding (for automated payroll systems), Formula Tables for Percentage Method Withholding (for Automated Payroll Systems) I Introduction, Introduction N Nonresident alien employees, Withholding Income Taxes on the Wages of Nonresident Alien Employees Notice to employers, Notice to Employers Q Qualified transportation benefits Commuter highway vehicle transportation, Increased Exclusion Amount for Combined Commuter Highway Vehicle Transportation and Transit Passes Transit passes, Increased Exclusion Amount for Combined Commuter Highway Vehicle Transportation and Transit Passes W Wage bracket percentage method tables (for automated payroll systems), Wage Bracket Percentage Method Tables (for Automated Payroll Systems) Withholding income taxes on wages Nonresident alien employees, Withholding Income Taxes on the Wages of Nonresident Alien Employees Withholding: Alternative methods, Alternative Methods for Figuring Withholding Percentage method, Percentage Method Wage bracket method, Wage Bracket Method Prev  Up     Home   More Online Publications
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Tax Relief for Victims of Storms and Floods in Missouri

KS-MO-2011-34, Aug. 17, 2011

ST. LOUIS — Victims of flooding beginning on June 1, 2011, in parts of Missouri may qualify for tax relief from the Internal Revenue Service.

The President has declared Andrew, Atchison, Buchanan, Holt, Lafayette and Platte counties a federal disaster area. Individuals who reside or have a business in these localities may qualify for tax relief.

As a result, the IRS has postponed until Aug. 1, 2011, certain deadlines occurring from June 1 to Aug. 1 that affect taxpayers who live or have a business in the disaster area. This includes the June 15 deadline for making estimated tax payments.

In addition, the IRS is abating the failure-to-deposit penalties for employment and excise tax deposits due on or after June 1 and on or before June 16, 2011, as long as the deposits were made by June 16, 2011.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 1-866-562-5227 to request this tax relief.

Covered Disaster Area

The areas listed above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS has given affected taxpayers until Aug. 1, 2011, to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after June 1 and on or before Aug. 1, 2011.

The IRS also gives affected taxpayers until Aug. 1 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after June 1 and on or before Aug. 1.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after June 1 and on or before June 16, provided the taxpayer made these deposits by June 16.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.
Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation, "Missouri/Flooding," at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications or order them by calling 1-800-TAX-FORM (1-800-829-3676). The IRS toll-free number for general tax questions is 1-800-829-1040.

Related Information:

Recent IRS Disaster Relief Announcements
 

 

Page Last Reviewed or Updated: 20-Feb-2014

The How To File A 2012 Tax Return

How to file a 2012 tax return 5. How to file a 2012 tax return   Soil and Water Conservation Expenses Table of Contents Introduction Topics - This chapter discusses: Business of Farming Plan Certification Conservation ExpensesWater well. How to file a 2012 tax return Assessment by Conservation DistrictAssessment for Depreciable Property 25% Limit on DeductionNet operating loss. How to file a 2012 tax return When to Deduct or Capitalize Sale of a Farm Introduction If you are in the business of farming, you can choose to deduct certain expenses for: Soil or water conservation, Prevention of erosion of land used in farming, or Endangered species recovery. How to file a 2012 tax return Otherwise, these are capital expenses that must be added to the basis of the land. How to file a 2012 tax return (See chapter 6 for information on determining basis. How to file a 2012 tax return ) Conservation expenses for land in a foreign country do not qualify for this special treatment. How to file a 2012 tax return The deduction for conservation expenses cannot be more than 25% of your gross income from farming. How to file a 2012 tax return See 25% Limit on Deduction , later. How to file a 2012 tax return Although some expenses are not deductible as soil and water conservation expenses, they may be deductible as ordinary and necessary farm expenses. How to file a 2012 tax return These include interest and taxes, the cost of periodically clearing brush from productive land, the regular removal of sediment from a drainage ditch, and expenses paid or incurred primarily to produce an agricultural crop that may also conserve soil. How to file a 2012 tax return You must include in income most government payments for approved conservation practices. How to file a 2012 tax return However, you can exclude some payments you receive under certain cost-sharing conservation programs. How to file a 2012 tax return For more information, see Agricultural Program Payments in chapter 3. How to file a 2012 tax return To get the full deduction to which you are entitled, you should maintain your records to clearly distinguish between your ordinary and necessary farm business expenses and your soil and water conservation expenses. How to file a 2012 tax return Topics - This chapter discusses: Business of farming Plan certification Conservation expenses Assessment by conservation district 25% limit on deduction When to deduct or capitalize Sale of a farm Business of Farming For purposes of soil and water conservation expenses, you are in the business of farming if you cultivate, operate, or manage a farm for profit, either as an owner or a tenant. How to file a 2012 tax return You are not in the business of farming if you cultivate or operate a farm for recreation or pleasure, rather than for profit. How to file a 2012 tax return You are not farming if you are engaged only in forestry or the growing of timber. How to file a 2012 tax return Farm defined. How to file a 2012 tax return   A farm includes livestock, dairy, poultry, fish, fruit, and truck farms. How to file a 2012 tax return It also includes plantations, ranches, ranges, and orchards. How to file a 2012 tax return A fish farm is an area where fish and other marine animals are grown or raised and artificially fed, protected, etc. How to file a 2012 tax return It does not include an area where they are merely caught or harvested. How to file a 2012 tax return A plant nursery is a farm for purposes of deducting soil and water conservation expenses. How to file a 2012 tax return Farm rental. How to file a 2012 tax return   If you own a farm and receive farm rental payments based on farm production, either in cash or crop shares, you are in the business of farming. How to file a 2012 tax return If you get cash rental for a farm you own that is not used in farm production, you cannot deduct soil and water conservation expenses for that farm. How to file a 2012 tax return   If you receive a fixed rental payment that is not based on farm production, you are in the business of farming only if you materially participate in operating or managing the farm. How to file a 2012 tax return Example. How to file a 2012 tax return You own a farm in Iowa and live in California. How to file a 2012 tax return You rent the farm for $175 in cash per acre and do not materially participate in producing or managing production of the crops grown on the farm. How to file a 2012 tax return You cannot deduct your soil conservation expenses for this farm. How to file a 2012 tax return You must capitalize the expenses and add them to the basis of the land. How to file a 2012 tax return     For more information, see Material participation for landlords under Landlord Participation in Farming in chapter 12. How to file a 2012 tax return Plan Certification You can deduct soil and water conservation expenses only if they are consistent with a plan approved by the Natural Resources Conservation Service (NRCS) of the Department of Agriculture. How to file a 2012 tax return If no such plan exists, the expenses must be consistent with a soil conservation plan of a comparable state agency. How to file a 2012 tax return Keep a copy of the plan with your books and records to support your deductions. How to file a 2012 tax return Conservation plan. How to file a 2012 tax return   A conservation plan includes the farming conservation practices approved for the area where your farmland is located. How to file a 2012 tax return There are three types of approved plans. How to file a 2012 tax return NRCS individual site plans. How to file a 2012 tax return These plans are issued individually to farmers who request assistance from NRCS to develop a conservation plan designed specifically for their farmland. How to file a 2012 tax return NRCS county plans. How to file a 2012 tax return These plans include a listing of farm conservation practices approved for the county where the farmland is located. How to file a 2012 tax return You can deduct expenses for conservation practices not included on the NRCS county plans only if the practice is a part of an individual site plan. How to file a 2012 tax return Comparable state agency plans. How to file a 2012 tax return These plans are approved by state agencies and can be approved individual site plans or county plans. How to file a 2012 tax return   A list of NRCS conservation programs is available at www. How to file a 2012 tax return nrcs. How to file a 2012 tax return usda. How to file a 2012 tax return gov/programs. How to file a 2012 tax return Individual site plans can be obtained from NRCS offices and the comparable state agencies. How to file a 2012 tax return Conservation Expenses You can deduct conservation expenses only for land you or your tenant are using, or have used in the past, for farming. How to file a 2012 tax return These expenses include, but are not limited to, the following. How to file a 2012 tax return The treatment or movement of earth, such as: Leveling, Conditioning, Grading, Terracing, Contour furrowing, and Restoration of soil fertility. How to file a 2012 tax return The construction, control, and protection of: Diversion channels, Drainage ditches, Irrigation ditches, Earthen dams, and Watercourses, outlets, and ponds. How to file a 2012 tax return The eradication of brush. How to file a 2012 tax return The planting of windbreaks. How to file a 2012 tax return You cannot deduct expenses to drain or fill wetlands, or to prepare land for center pivot irrigation systems, as soil and water conservation expenses. How to file a 2012 tax return These expenses are added to the basis of the land. How to file a 2012 tax return If you choose to deduct soil and water conservation expenses, you cannot exclude from gross income any cost-sharing payments you receive for those expenses. How to file a 2012 tax return See chapter 3 for information about payments eligible for the cost-sharing exclusion. How to file a 2012 tax return New farm or farmland. How to file a 2012 tax return   If you acquire a new farm or new farmland from someone who was using it in farming immediately before you acquired the land, soil and water conservation expenses you incur on it will be treated as made on land used in farming at the time the expenses were paid or incurred. How to file a 2012 tax return You can deduct soil and water conservation expenses for this land if your use of it is substantially a continuation of its use in farming. How to file a 2012 tax return The new farming activity does not have to be the same as the old farming activity. How to file a 2012 tax return For example, if you buy land that was used for grazing cattle and then prepare it for use as an apple orchard, you can deduct your conservation expenses. How to file a 2012 tax return Land not used for farming. How to file a 2012 tax return   If your conservation expenses benefit both land that does not qualify as land used for farming and land that does qualify, you must allocate the expenses between the two types of land. How to file a 2012 tax return For example, if the expenses benefit 200 acres of your land, but only 120 acres of this land are used for farming, then you can deduct 60% (120 ÷ 200) of the expenses. How to file a 2012 tax return You can use another method to allocate these expenses if you can clearly show that your method is more reasonable. How to file a 2012 tax return Depreciable conservation assets. How to file a 2012 tax return   You generally cannot deduct your expenses for depreciable conservation assets. How to file a 2012 tax return However, you can deduct certain amounts you pay or incur for an assessment for depreciable property that a soil and water conservation or drainage district levies against your farm. How to file a 2012 tax return See Assessment for Depreciable Property , later. How to file a 2012 tax return   You must capitalize expenses to buy, build, install, or improve depreciable structures or facilities. How to file a 2012 tax return These expenses include those for materials, supplies, wages, fuel, hauling, and moving dirt when making structures such as tanks, reservoirs, pipes, culverts, canals, dams, wells, or pumps composed of masonry, concrete, tile, metal, or wood. How to file a 2012 tax return You recover your capital investment through annual allowances for depreciation. How to file a 2012 tax return   You can deduct soil and water conservation expenses for nondepreciable earthen items. How to file a 2012 tax return Nondepreciable earthen items include certain dams, ponds, and terraces described under Property Having a Determinable Useful Life in chapter 7. How to file a 2012 tax return Water well. How to file a 2012 tax return   You cannot deduct the cost of drilling a water well for irrigation and other agricultural purposes as a soil and water conservation expense. How to file a 2012 tax return It is a capital expense. How to file a 2012 tax return You recover your cost through depreciation. How to file a 2012 tax return You also must capitalize your cost for drilling a test hole. How to file a 2012 tax return If the test hole produces no water and you continue drilling, the cost of the test hole is added to the cost of the producing well. How to file a 2012 tax return You can recover the total cost through depreciation deductions. How to file a 2012 tax return   If a test hole, dry hole, or dried-up well (resulting from prolonged lack of rain, for instance) is abandoned, you can deduct your unrecovered cost in the year of abandonment. How to file a 2012 tax return Abandonment means that all economic benefits from the well are terminated. How to file a 2012 tax return For example, filling or sealing a well excavation or casing so that all economic benefits from the well are terminated constitutes an abandonment. How to file a 2012 tax return Endangered species recovery expenses. How to file a 2012 tax return   If you are in the business of farming and meet other specific requirements, you can choose to deduct the conservation expenses discussed earlier as endangered species recovery expenses. How to file a 2012 tax return Otherwise, these are capital expenses that must be added to the basis of the land. How to file a 2012 tax return   The expenses must be paid or incurred for the purpose of achieving site-specific management actions recommended in a recovery plan approved under section 4(f) of the Endangered Species Act of 1973. How to file a 2012 tax return See Internal Revenue Code section 175 for more information. How to file a 2012 tax return Assessment by Conservation District In some localities, a soil or water conservation or drainage district incurs expenses for soil or water conservation and levies an assessment against the farmers who benefit from the expenses. How to file a 2012 tax return You can deduct as a conservation expense amounts you pay or incur for the part of an assessment that: Covers expenses you could deduct if you had paid them directly, or Covers expenses for depreciable property used in the district's business. How to file a 2012 tax return Assessment for Depreciable Property You generally can deduct as a conservation expense amounts you pay or incur for the part of a conservation or drainage district assessment that covers expenses for depreciable property. How to file a 2012 tax return This includes items such as pumps, locks, concrete structures (including dams and weir gates), draglines, and similar equipment. How to file a 2012 tax return The depreciable property must be used in the district's soil and water conservation activities. How to file a 2012 tax return However, the following limits apply to these assessments. How to file a 2012 tax return The total assessment limit. How to file a 2012 tax return The yearly assessment limit. How to file a 2012 tax return After you apply these limits, the amount you can deduct is added to your other conservation expenses for the year. How to file a 2012 tax return The total for these expenses is then subject to the 25% of gross income from farming limit on the deduction, discussed later. How to file a 2012 tax return See Table 5-1 for a brief summary of these limits. How to file a 2012 tax return Table 5-1. How to file a 2012 tax return Limits on Deducting an Assessment by a Conservation District for Depreciable Property Total Limit on Deduction for Assessment for Depreciable Property Yearly Limit on Deduction for Assessment for Depreciable Property Yearly Limit for All Conservation Expenses 10% of: $500 + 10% of: 25% of: Total assessment against all members of the district for the property. How to file a 2012 tax return Your deductible share of the cost to the district for the property. How to file a 2012 tax return Your gross income from farming. How to file a 2012 tax return No one taxpayer can deduct more than 10% of the total assessment. How to file a 2012 tax return Any amount over 10% is a capital expense and is added to the basis of your land. How to file a 2012 tax return If an assessment is paid in installments, each payment must be prorated between the conservation expense and the capital expense. How to file a 2012 tax return If the amount you pay or incur for any year is more than the limit, you can deduct for that year only 10% of your deductible share of the cost. How to file a 2012 tax return You can deduct the remainder in equal amounts over the next 9 tax years. How to file a 2012 tax return Limit for all conservation expenses, including assessments for depreciable property. How to file a 2012 tax return Amounts greater than 25% can be carried to the following year and added to that year's expenses. How to file a 2012 tax return The total is then subject to the 25% of gross income from farming limit in that year. How to file a 2012 tax return To ensure your deduction is within the deduction limits, keep records to show the following. How to file a 2012 tax return The total assessment against all members of the district for the depreciable property. How to file a 2012 tax return Your deductible share of the cost to the district for the depreciable property. How to file a 2012 tax return Your gross income from farming. How to file a 2012 tax return Total assessment limit. How to file a 2012 tax return   You cannot deduct more than 10% of the total amount assessed to all members of the conservation or drainage district for the depreciable property. How to file a 2012 tax return This applies whether you pay the assessment in one payment or in installments. How to file a 2012 tax return If your assessment is more than 10% of the total amount assessed, both the following rules apply. How to file a 2012 tax return The amount over 10% is a capital expense and is added to the basis of your land. How to file a 2012 tax return If the assessment is paid in installments, each payment must be prorated between the conservation expense and the capital expense. How to file a 2012 tax return Yearly assessment limit. How to file a 2012 tax return   The maximum amount you can deduct in any one year is the total of 10% of your deductible share of the cost as explained earlier, plus $500. How to file a 2012 tax return If the amount you pay or incur is equal to or less than the maximum amount, you can deduct it in the year it is paid or incurred. How to file a 2012 tax return If the amount you pay or incur is more, you can deduct in that year only 10% of your deductible share of the cost. How to file a 2012 tax return You can deduct the remainder in equal amounts over the next 9 tax years. How to file a 2012 tax return Your total conservation expense deduction for each year is also subject to the 25% of gross income from farming limit on the deduction, discussed later. How to file a 2012 tax return Example 1. How to file a 2012 tax return This year, the soil conservation district levies and you pay an assessment of $2,400 against your farm. How to file a 2012 tax return Of the assessment, $1,500 is for digging drainage ditches. How to file a 2012 tax return You can deduct this part as a soil or conservation expense as if you had paid it directly. How to file a 2012 tax return The remaining $900 is for depreciable equipment to be used in the district's irrigation activities. How to file a 2012 tax return The total amount assessed by the district against all its members for the depreciable equipment is $7,000. How to file a 2012 tax return The total amount you can deduct for the depreciable equipment is limited to 10% of the total amount assessed by the district against all its members for depreciable equipment, or $700. How to file a 2012 tax return The $200 excess ($900 − $700) is a capital expense you must add to the basis of your farm. How to file a 2012 tax return To figure the maximum amount you can deduct for the depreciable equipment this year, multiply your deductible share of the total assessment ($700) by 10%. How to file a 2012 tax return Add $500 to the result for a total of $570. How to file a 2012 tax return Your deductible share, $700, is greater than the maximum amount deductible in one year, so you can deduct only $70 of the amount you paid or incurred for depreciable property this year (10% of $700). How to file a 2012 tax return You can deduct the balance at the rate of $70 a year over the next 9 years. How to file a 2012 tax return You add $70 to the $1,500 portion of the assessment for drainage ditches. How to file a 2012 tax return You can deduct $1,570 of the $2,400 assessment as a soil and water conservation expense this year, subject to the 25% of gross income from farming limit on the deduction, discussed later. How to file a 2012 tax return Example 2. How to file a 2012 tax return Assume the same facts in Example 1 except that $1,850 of the $2,400 assessment is for digging drainage ditches and $550 is for depreciable equipment. How to file a 2012 tax return The total amount assessed by the district against all its members for depreciable equipment is $5,500. How to file a 2012 tax return The total amount you can deduct for the depreciable equipment is limited to 10% of this amount, or $550. How to file a 2012 tax return The maximum amount you can deduct this year for the depreciable equipment is $555 (10% of your deductible share of the total assessment, $55, plus $500). How to file a 2012 tax return Since your deductible share is less than the maximum amount deductible in one year, you can deduct the entire $550 this year. How to file a 2012 tax return You can deduct the entire assessment, $2,400, as a soil and water conservation expense this year, subject to the 25% of gross income from farming limit on the deduction, discussed below. How to file a 2012 tax return Sale or other disposal of land during 9-year period. How to file a 2012 tax return   If you dispose of the land during the 9-year period for deducting conservation expenses subject to the yearly limit, any amounts you have not yet deducted because of this limit are added to the basis of the property. How to file a 2012 tax return Death of farmer during 9-year period. How to file a 2012 tax return   If a farmer dies during the 9-year period, any remaining amounts not yet deducted are deducted in the year of death. How to file a 2012 tax return 25% Limit on Deduction The total deduction for conservation expenses in any tax year is limited to 25% of your gross income from farming for the year. How to file a 2012 tax return Gross income from farming. How to file a 2012 tax return   Gross income from farming is the income you derive in the business of farming from the production of crops, fish, fruits, other agricultural products, or livestock. How to file a 2012 tax return Gains from sales of draft, breeding, or dairy livestock are included. How to file a 2012 tax return Gains from sales of assets such as farm machinery, or from the disposition of land, are not included. How to file a 2012 tax return Carryover of deduction. How to file a 2012 tax return   If your deductible conservation expenses in any year are more than 25% of your gross income from farming for that year, you can carry the unused deduction over to later years. How to file a 2012 tax return However, the deduction in any later year is limited to 25% of the gross income from farming for that year as well. How to file a 2012 tax return Example. How to file a 2012 tax return In 2012, you have gross income of $32,000 from two farms. How to file a 2012 tax return During the year, you incurred $10,000 of deductible soil and water conservation expenses for one of the farms. How to file a 2012 tax return However, your deduction is limited to 25% of $32,000, or $8,000. How to file a 2012 tax return The $2,000 excess ($10,000 − $8,000) is carried over to 2013 and added to deductible soil and water conservation expenses made in that year. How to file a 2012 tax return The total of the 2012 carryover plus 2013 expenses is deductible in 2013, subject to the limit of 25% of your gross income from farming in 2013. How to file a 2012 tax return Any expenses over the limit in that year are carried to 2014 and later years. How to file a 2012 tax return Net operating loss. How to file a 2012 tax return   The deduction for soil and water conservation expenses, after applying the 25% limit, is included when figuring a net operating loss (NOL) for the year. How to file a 2012 tax return If the NOL is carried to another year, the soil and water conservation deduction included in the NOL is not subject to the 25% limit in the year to which it is carried. How to file a 2012 tax return When to Deduct or Capitalize If you choose to deduct soil and water conservation expenses, you must deduct the total allowable amount on your tax return for the first year you pay or incur these expenses. How to file a 2012 tax return If you do not choose to deduct the expenses, you must capitalize them. How to file a 2012 tax return Change of method. How to file a 2012 tax return   If you want to change your method for the treatment of soil and water conservation expenses, or you want to treat the expenses for a particular project or a single farm in a different manner, you must get the approval of the IRS. How to file a 2012 tax return To get this approval, submit a written request by the due date of your return for the first tax year you want the new method to apply. How to file a 2012 tax return You or your authorized representative must sign the request. How to file a 2012 tax return   The request must include the following information. How to file a 2012 tax return Your name and address. How to file a 2012 tax return The first tax year the method or change of method is to apply. How to file a 2012 tax return Whether the method or change of method applies to all your soil and water conservation expenses or only to those for a particular project or farm. How to file a 2012 tax return If the method or change of method does not apply to all your expenses, identify the project or farm to which the expenses apply. How to file a 2012 tax return The total expenses you paid or incurred in the first tax year the method or change of method is to apply. How to file a 2012 tax return A statement that you will account separately in your books for the expenses to which this method or change of method relates. How to file a 2012 tax return Send your request to the following  address. How to file a 2012 tax return  Department of the Treasury Internal Revenue Service Center Cincinnati, OH 45999  For more information, see Change in  Accounting Method in chapter 2. How to file a 2012 tax return Sale of a Farm If you sell your farm, you cannot adjust the basis of the land at the time of the sale for any unused carryover of soil and water conservation expenses (except for deductions of assessments for depreciable property, discussed earlier). How to file a 2012 tax return However, if you acquire another farm and return to the business of farming, you can start taking deductions again for the unused carryovers. How to file a 2012 tax return Gain on sale of farmland. How to file a 2012 tax return   If you held the land 5 years or less before you sold it, gain on the sale of the land is treated as ordinary income up to the amount you previously deducted for soil and water conservation expenses. How to file a 2012 tax return If you held the land less than 10 but more than 5 years, the gain is treated as ordinary income up to a specified percentage of the previous deductions. How to file a 2012 tax return See Section 1252 property under Other Gains in chapter 9. How to file a 2012 tax return Prev  Up  Next   Home   More Online Publications